Washington, D.C. — Today, the Department of Housing and Urban Development, or HUD, released its second progress report on the Distressed Asset Stabilization Program, or DASP. According to HUD, approximately half of the loans have been resolved. The program has helped more than 40 percent of homeowners avoid foreclosure, mostly through short sales and deeds-in-lieu of foreclosure. However, while a few buyers have kept a good percentage of families in their homes, mostly through special Neighborhood Stabilization Outcome, or NSO, auctions, home retention rates across the program are disappointing, and foreclosure rates are higher than they were last August when HUD first provided public program data.
Julia Gordon, Director of Housing Finance and Policy at the Center for American Progress, released the following statement:
While the overall numbers cited by HUD are commendable, today’s report from HUD does not fully answer important questions about how well private investors are handling the bulk pools of distressed Federal Housing Administration, or FHA, loans.
To help the public understand why some pools are performing significantly better than others, HUD should share more information about the characteristics of each loan pool, provide buyer-specific performance data on auctions with more than one buyer, and offer more information about reperforming loans, including whether a loan modification was provided and the terms of any such modification. Additionally, HUD should provide additional explanation around its NSO outcomes tables, as well as greater detail on how the program has led to reductions in HUD’s loss rate.
Finally, to improve the program’s impact on families and communities, HUD should ensure greater involvement of community-based nonprofits in the sales, require buyers to prioritize home retention solutions over other foreclosure prevention alternatives, and track loan outcomes even if the loan is sold to another investor.
In February 2015, CAP joined a letter, sent to FHA Commissioner Biniam Gebre, that outlined a list of recommendations to improve DASP.
Related resources:
Is the FHA Distressed Asset Stabilization Program Meeting its Goals? by Sarah Edelman, Julia Gordon, and Aashna Desai
For more information or to speak with an expert, contact Allison Preiss at [email protected] or 202.478.6331.